The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

The EU's Threat to the City of London

Professor Tim Congdon Professor Ken Minogue

Speech by Professor Tim Congdon

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Good evening ladies and gentleman and it’s a great pleasure to be speaking this evening. Can I just say it’s a great pleasure to be sharing a platform with Ken Minogue, a very old friend and I look forward very much to your talk Ken.

I’m going to be talking about why does Britain want to be involved with European financial integration, that’s my central question. And my answer is quite simply that we’ve got nothing to gain whatever from this process and we’re actually at risk of losing quite a lot to the extent that we are involved. I think some wider messages will follow from what I have to say and my talk is going to range very widely.

I’m going to start by comparing two different views of the relationship between individuals, in citizens and their governments and then I’m going to link that to the topic of financial services and the development, regulation and so on.

So I want first of all to set out what I think is one very important view of a typical organisation. It starts off with the idea that we live in a nation and we want to be free, free to live our own lives but of course other people also will want to live in a society and there may occasionally be some conflicts. And what we do is we agree that there should be a law and in order to deal with the various conflicts and econosphere there are going to be property rights and we recognise other people’s property rights and they recognise ours. And the sovereign’s task is to provide statements of the law and the framework of law enforcement.

Now of course the laws may change from time to time and they can change partly because in the courts themselves there are hard cases and new cases and so they set precedents and partly because decisions sometimes that have been made by the sovereign, maybe some of the precedents are inconsistent or whatever and the sovereign may want to involve people in part. And so we have certain individuals calling themselves politicians, our leaders and so on.

Now one of the aspects of the standard society is that we don’t actually need our leaders to meet that often, shouldn’t do, because the key to the law is that it’s stable; its supposed to set a framework which is predictable and doesn’t change so much, certainly everything we can do can be set within that framework, we know what’s going to happen when there is a conflict, when our property rights are challenged and so on. And by the way a lot of the change can occur inside the legal system itself because of precedent.

Part of what happens in a society of this sort is of course that every now and again people will buy and sell property of various kinds of course, and these transactions may become very complex and they may lead to complexities and difficulties, maybe fraud, embezzlement, all sorts of things. And I’m an enthusiast of the novels of Robert Surtees and other Victorian novels and even in that society all sorts of strange things were going on in the terms of buying and selling property and forcing property rights and so on.

So property owners want a reliable, predictable and comprehensive legal system and there may be recognised marketplaces where they buy and sell things, this is under the law but it can well be self-regulated, no need for government involvement, no need for politicians to get involved and by the way, this is very important, the participants in these markets will want high quality regulation because that makes things more predictable, it means that asset prices therefore are higher, its to the benefit of all the participants in the market that they regulate themselves properly. And this needn’t involve the state, politicians or whatever, they do it themselves. I used to be a partner of a stock broking firm many years ago and the rules we had predated all of the post 1985 in a thick yellow book, also some smaller books, they’ve all evolved inside the Stock Exchange with nothing to do with statute law.

This sort of vision of a political organisation I would associate particularly with the English speaking world and of course arose from the 15th century struggles between the Crown and other interests, making an English State I mean in Britain in the sense that particularly in England and I just list some of those people there. I don’t need to run through them all I think. But I think just to please Ken I would say that, to kind of characterise this in a phrase, it’s a civil association, a phrase that Oakeshott used to characterise this sort of society.

As I say the aspects of the political parties are not very active. It used to be the case that parliaments weren’t continuous, they were just called when they were needed and frankly our upper classes, they had Ascot and Wimbledon and Henley and so on and they didn’t need to be the whole time making laws for heaven’s sake, because the law was there and rebuilt itself over time as judges took positions and so on. The law office has whole volumes of this stuff.

I would just say here if you think this is fantasy; in America until the 1930s Federal Government spending never exceeded 3% of national income. America became the world’s dominant economy with a government that never spent, apart from the Civil War, never spent more than 3% of national income; a wealthy society and so on and so forth just through this sort of society. These sorts of societies still by the way exist in Crown Dependencies like Bermuda, the Isle of Man, the Channel Islands, they are still very much like that even today and they’ll come back later on in my talk.

We found a way of thinking about typical organization and when it starts it seems quite sensible. We live in a nation; we want our nation to be a success and we want individuals but actually it matters what we do individually. Society is what it’s all about, there’s definitely such a thing as society and it doesn’t really matter. Now these various ways of thinking about success, and I could go through some that historically have been quite important, the current vogue is for economic competitiveness and I have to confess that there’s ambiguity here because one of the things about having a small state is that its economically competitive, but many people think that its to achieve economic success. So the state can harness society’s resources in order to achieve more success, the state’s job is managerial, organisational and it’s to ensure that these resources are deployed effectively in the nation’s achievements. Now it’s obviously the case when we go to war but even it’s true in the case of running a successful economy according to one way of thinking about things.

And in this sort of society the political leaders are very important because they see themselves as having a role analogous to generals or admirals in warfare or like chief executives in running a business. So unlike the previous kind, they’re always doing things and there’s always the newspapers. They’re supposed to be elitist in some sense. Of course they are aided and abetted by bureaucracy, that’s the same notion of success and it’s very much a managerial bureaucracy, it’s not about law it’s about managing things successfully. And I’m going to be a bit naughty and say that this way of looking at things is very continental and obviously it’s implicit in lots of German political philosophies and Ken knows far more about this than I do, and hopefully I’ll just characterise just looking at things as enterprise association and sometimes it goes to rather unpleasant extremes but lets take it that it can be limited to trying to manage you know society is like a business, running it properly.

Now happily this vision of society is not nowadays involved with trying to dominate other countries militarily and so on, but there is this concern for competitiveness. And that comes through in all of these bits of paper about the financial services industry and so on – I’ll come back as we go along. So the way that people see things is that change comes from above, its driven by the leaders, driven by the bureaucrats, driven by the politicians, that doesn’t come from below and I have to confess that sometimes the world’s a bit complicated, of course there’s lobbying from below too. So you have this kind of system not about stability, the law, respecting rights, gradual change, it’s about bureaucracy, management, lobbying and so on. And by the way one of the buzz words, one of the favourite words in all of this is change, people love change.

So we have these two different ways of looking at things. Let me just say before I move on that there’s been I’m afraid in Anglo-American societies over the last 100 years quite a lot of dilution of all this, but there still is something of that there.

And may I just now bring this back to the topic we’re really concerned with and so just think anecdotal. I was at a presentation about three years ago, I was presenting one point of view – I’ve forgotten the details now – and there was Lampolusi, Baron Lampolusi presenting another point of view. And at one point Baron Lampolusi who’s behind the process of financial integration in Europe, one of the key bureaucrats, a pleasant man by the way, he said the private sector couldn’t change all these regulations and laws, it couldn’t pass all these laws and I just told him what the common law is and what precedent does and how all these institutions developed before the state was involved and he didn’t know what I was talking about, it was all new to him and he was completely dumbfounded. That is the extent of it, the people they don’t understand how we got here. You know in the 1920s/1930s in Britain and America the financial services industries existed, there were bonds and shares and stock markets and so on and nothing had come from the state, it had all developed autonomously through the law, self regulation and so on.

I’m just going to now talk a bit more about how financial businesses evolved in the last 50/100 years. Obviously people who have wealth are very concerned as I said that their property rights be protected and I’m afraid as a general rule they’re not necessarily patriotic. I’m sorry about that but they aren’t. And they really want to make sure that what they’ve got and what they’ve earned and what they’ve saved is theirs and perhaps their children’s too. That’s what they care about. They want to have their assets in locations where the registration and transfer of assets is cheap and safe and ideally where taxes are low and regulation is light. And partly because the differences in government philosophy over+ the last 200 years, I think it’s a fair generalisation to say that financial business has tended to migrate towards English speaking jurisdictions and to flourish in those jurisdictions and not in those nations with continental philosophies of governance.

Now that’s rather sweeping, obviously there’s Switzerland, that’s a bit of an exception. Nevertheless that is a fair general rule, that’s reasonable enough. And may I just say here that if the movement of capital is free, the movement of people is free, if the movement of property and goods is free then there will be a tendency towards a world market. People will tend to hold their assets where they get the best return, they’ll tend to borrow where its cheapest etc.

The other thing in all this is that what’s happened particularly in this period, the last 50 years particularly is that the financial markets have ceased to be domestic and national; they have become offshore and international so that the notion that a particular financial instrument takes place in a certain location, a certain nation is no longer really valid. I know it sounds a bit odd but that’s actually what happens. And I’ve just mentioned a few minutes ago some of these English speaking Crown dependencies have got a totally disproportionate share of the world’s financial business precisely because they are such locations, if there’s reliable law, there’s often low tax, there’s light regulations and so on. And they are English speaking, they’re actually proud that they’re under the British Crown so their property right would be respected.

And I’ll just in a few seconds illustrate this more specifically, but in effect there has been the emergence of world markets in key financial instruments, one single, global market in financial instruments. Now it happens that perhaps somebody’s registered in the British Virgin Islands, in Cayman, Bermuda, various places and some are registered in Germany and America but so much is in these places. A lot of value added, these are very small nations if you call them nations, a lot of value added in terms of managing the assets and so on is actually done in London and this is critical to London’s prosperity because we’re talking about quite large sums of money as I’ll just soon show you.

Perhaps the most extreme kind of market of this sort is a market which ironically used to be called the Euro Bond Market. Suppose you’re an Egyptian, you have $50 million. You don’t want to leave it in Egypt because of exchange controls so you’ve got it out, I am not going to ask how you got it out but you got it out, you want to invest in a bond, you want it to be law, just under the law, you just put down this contract is subject to English law enforced in the English court. There is a company, a French company wants to raise $50 million in a bond, so they issue – its American currency – they issue the bond, sell it to the Egyptian or peoples all around the world, subject to English law, please tell me in which nation is this bond being transacted, registered or whatever, its in no nation.

However the work is being done largely in practice in London and that’s the way its evolved over the last 50 years, that sort of so called Euro Bonds now called kind of international bonds didn’t exist really in the 1950s, they started up in the early 1960s and this market, now this is this line here, the blue line and see even back in the 1990s its very small, its now about getting on for $20 trillion, that’s the value of the outstanding stock of paper. This by the way, the magenta line includes a lot of government tax. If you took that out they’d now be about the same size. So the international bond market is catching up with the, take out government debt, the domestic bond market. Basically the savers are global, the issuers are global, doesn’t really belong to any single nation but actually most of the work is done in the UK in London.

$20 trillion is about six times the UK’s GDP.I would imagine that the arranging, issuing, underwriting and so on of all of this paper probably involves, it generates about a half the reported percent of our national income, one of the biggest industries in the city of London. Now this is a single global market already, a single global market lets remember that.

Lets now just look at another trend. There is a kind of resentment of the fact that this market is predominantly in London, there’s resentment in the rest of Europe and there are some somewhat disagreeable aspects of this bond market, I don’t approve by the way of tax evasion, certainly not. Much of the market arose because of tax evasion, these bits of paper began as what’s called bearer securities, you establish ownership by showing that you own it, you know its like on a pound note there is ‘pay the bearer on demand’, the ownership of the note is established by the fact that you’re the bearer and you know they appear in some of the Maygrey novels these bearer securities. Nobody knows where they are, they’re not registered so they were very important, the tax evasion predominantly, predominantly in the continent of Europe.

But actually the same sort of story can be told driven by the same sort of dynamics in equities. This is a chart of the stock of equities issued by British companies. Its worth about getting on for £2,000 billion, a bit more than the UK GDP and if you were to go back many decades the bulk of these would have been owned in the UK in fact mostly by individuals. In 1990 a little bit was owned by what I call overseas entities, and I’ll explain that in a second, and the bulk was owned inside the UK by what I’ll call UK entities and today the overseas bit is about 40%. It’s gone from about 10% here back in 1990 to about 40% today. The overseas owned bit is rising all the time.

Now if you look around the world, if you look at the American Stock Market also all the European Stock Markets the same story is coming out. Everywhere the foreign owned bit of the equity market is increasing relative to the domestically owned bit. What’s going on here? The answer is that people and companies are moving their assets outside national control; they’re setting up trusts in the DDI in the Caymans, in Switzerland. They’re getting themselves out of nations into what they take to be safe jurisdictions and they generally are safe jurisdictions I hasten to add. And when, you know I just showed you the foreign ownership has been 40% of the total, the profit would indeed be fairly straight forward but a lot of it is in fact trusts, nominee accounts and so on, which actually the ultimate beneficial ownership is British. There is a lot and these trends are universal.

There is in effect nowadays a single global market in equities and increasingly the order flow is coming from not Germany and Sweden and France, its coming from the Cayman Islands and the British Virgin Islands and places like that, increasingly. So we have in effect again a global market in equities, I can believe it’s very competitive. A company by the way because they can issue much larger amounts the international capital market has become far more efficient.

Now let me come back to our real topic about European financial integration. There’s quite a lot of, as I say, resentment about what’s happening here and Europe. Again Europe is a big phrase but Europe’s integrations bureaucrats would like to stop this process. And I think there’s no doubt that part of what’s driving the Financial Services Action Plan in MiFID is actually to see how somehow this can be taken away from the English speaking world.

There is all this talk about, one example is that tax harmonization is part of these processes and as I said rightly or wrongly, savers try to avoid tax and there’s nothing illegal about taking yourself away from highly taxed European nations, taking yourself and your assets into a tax haven. That’s happening on a very large scale as I’ve just shown you. The motive for the FSAP, which really now goes back 1999 and MiFID which is about to take effect, is to establish a common passport for what are supposed to be 15 in the old days, now 27 separate markets and so because there is a common passport for these 15 or 27 separate markets there is to be a single European market.

For heaven’s sake, I’ve just shown you there is a single global market in all these instruments, all the instruments that really matter there is already a single global market. And by the way Britain does very well at servicing these markets. Sure there’s a kind of passport for domestic, for retail financial services and products. Look the reason they’re domestic is because they’re subject to their own national tax systems, the tax systems are national therefore the products are national. Its not going to have... no matter all this stuff about, you’ll still have a separate arrangement for life insurance products in France or Italy and Britain whatever; you’ll still have that despite all this guff. The reason they’re national is because the differences basically in taxation, the most of the key things, there is already a global market, we have nothing to gain at all from this process because we dominate the global marketplace in terms of servicing and providing value added, getting value added from those markets.

There is a speech by a chap called Frits Bolkestein, we talked about how there are going to be these 15 markets or one market. and they’ve got transatlantic market. Not even the transatlantic market, to the point you know he gave a speech in America about how America and... for God’s sake there really is a single global market right.

Okay well let me now finish. We’ve got, as I said, basically we’re already the world’s leading creator of value added in these offshore wholesale financial markets, we’ve got nothing to gain from this process. And I think that the larger message is that the people driving these processes really don’t understand where we’re coming from. I have to say many people in my own country and in America and elsewhere to a depressing extent don’t understand their own history and why they’re so lucky to live in these nations. However, the historical background to financial service regulation, finance services floor is very different in Britain and America and thank what it is in the continent of Europe, we have really nothing to gain from getting ourselves mixed up with these processes and quite a lot to lose.

Thank you very much.

Professor Kenneth Minogue

Thanks very much. Tim that was terrific and I abound in your sense, needless to say I agree with everything.

I said that I was going to talk about Trick or Treating – The EU Marches towards Statehood. Unfortunately Trick or Treaty is a sort of joke that every wit in London has been using for the last four or five weeks so I repent it. It’s a bit like making jokes about people’s names; it’s always a mistake because everybody’s made the joke before.

The EU marches towards statehood is indeed a large subject and that bears completely upon the question of the move on what was called constitution until it was torpedoed by the French and the Dutch to what is now called a treaty. The move from having an EU Foreign Minister to having a high representative is of course a very dangerous move towards statehood because it entirely devalues the Foreign Ministers of France, Germany, Britain and these various other countries. And if we have to coordinate our policies with our European associates or partners then we will have a big problem. NATO has a problem in Afghanistan at the moment getting quite a lot of them to front up with a bit of military power in the Southern Provinces of Afghanistan.

So I’m moving slightly on to a rather more general subject which I hope you will bear with me. The more exact title for what I’m doing is, and it’s grand, power, bureaucracy and complexity in the EU. My fundamental proposition is that since 1945 the British have found themselves under increasing layers of management. Up until 1945, apart from the few things in the international law and the Geneva Convention and so on, we were ruled simply from Westminster that was about it. Since then we’ve had the United Nations and a whole string of conventions like the International Convention on Refugees, which is at the root of much of our immigration policies and indeed problems. So a number of treaties of that kind were established, there was the United Nations and its agencies which are quite influential. We of course acquired under the Blair Government assemblies for Wales and Scotland, but then of course much of the most important of all the layers of management, the most extensive comes of course from our membership of the European Union because these managers of our lives are indefatigable in making regulations for our benefit. And as with all of these layers of management they have over the last generation come to be part of our lives to a great extent and we have no way of bringing these people to account, they are as it were set over us. I mean to the question of whether the coming treaty is a trick or a treaty, nobody here I think is probably in any doubt that it is trick as well as treaty of course.

So this is a rather strange situation, that is to say the extensive managerial condition we find ourselves in. It’s not as if anybody is likely to save our rulers or our EU Managers or UN bureaucrats or any of these people. What marvellous people, how wise they are, we are glad that they now tax us at nearly half our wealth and spend so much of it more wisely than we could have spent it ourselves. We do not have that feeling, on the contrary we rather despise our rulers, we despise the people of the EU and we feel that there are too many Lilliputians tying us up in little knots.

That’s the condition that we live in. It’s true that our sovereignty remains hanging by a thread because all of this has been done by treaties and the sovereign state can denounce a treaty and withdraw from a treaty. It causes a lot of fuss and the one thing that the British have shown over the last I suppose 50 years is they are deeply averse to fuss; they will do almost anything to avoid it. We haven’t quite acquired the constitution that we very nearly acquired getting out of which might well require a civil war.

Now yielding power of decision to others is an unusual step for anyone to take, I mean nobody does it, none of us as individuals do it unless you get something in return. You make a contract but a contract is a kind of bargain. Now why do people, why do governments yield up these powers to an alien set of people? The question becomes then whatever induced the rulers of Britain from 1945 to engage in this reckless abandonment of our sovereignty, of the elements of our sovereignty?

Part of the answer is that they were - I was about to say victims, but I think participants might be the more neutral word. They were participants in a moral movement. High minded politicians has for more than a century attacked the nation and its powers as the cause of war suggesting that international authorities could transcend the narrow and aggressive interest associated with nationalism. These were relatively simple people who could not distinguish between nationalism as a political movement on the one hand and the national interest of sovereign states on the other. They are of course two very different things indeed.

So being part of this moral movement was a sort of grand moral sense of giving something up for a higher cause. That’s what our politicians did and they felt, God help us, that they were being statesmanlike in doing so. And that illusion gives us a further clue to why it happened, vanity. Few things are more attractive to politicians than the acclaim and public admiration that comes from apparently virtuous national commitments, commitments whose disadvantages will only become apparent when their successors are ruling in some later years or possibly later generation. The realities of these moves are so remote from the ordinary processes of electoral accountability that they no longer provide democratic accountability that we have grown accustomed to; we do not judge political parties at elections in terms of the virtuous commitments they have signed up to.

Let me then propose as an important issue of constitutional democracy in our time, the problem of the accountability of our rulers when they act to sign away important elements of our sovereignty. Let me make one suggestion which may commend itself to some of you. Lets make it mandatory then that when any such instrument is signed on Britain’s behalf by our rulers such as the treaty, the dangers detected by the critics of the measure must be clearly formulated, an independent commission should be appointed whose business it would be to declare if any of these dangers, such as had been by the politicians signing up to be merely illusory dangers, if it should turn out that the critics were right and Britain’s independence had in some degree been compromised in that defined way, the politicians in question being accountable for our wellbeing must resign from both office and Parliament. A Prime Minister and other such Ministers as had been involved must in committing Britain to any such measure also provide an undated letter of resignation into the hands of the Lord Chancellor to be activated in clearly defined circumstances. I think this would give the kind of accountability in dealing with international organisations which at the moment is just not there.

The whole process of legislative managerialism to which we have been subjected looks like a power grab by international elites and a power abdication by us, the electors in Britain and of course in other countries and that is indeed part of the current reality.

Our second question that follows from this must of course then be why we, the freedom loving British, why have we not been rioting in the streets and throwing out this succession of rather dim rascals who have imposed this subservience upon us? And the answer lies I think in the third word of my title, namely complexity. The basic point requires I think a close attention to the distinction between politicians and bureaucrats on the one hand and busy people on the other. Some pictures of the world are of course necessarily complex and must be described in terms of technicalities but its also the case that the turning of simple things into pseudo-technicalities is a way of bamboozling people and impressing them with the remarkable acuity of what is in fact merely technical nonsense. This you may remember was emodus operandi of Sir Humphrey; it gets no better when Sir Humphrey speaks about 20 languages. Where management and administration are concerned we should remember that cartoon which is a parable of our times depicting a job interview with the interviewer saying to the job seeker, ‘we’ve got enough Managers, what we want is someone to do the work’. We as the people of Britain have been chosen to do the work while all the clean, well paid work of management has been taken over by this largely alien bureaucratic elite. Go to Brussels and see these people at work for yourselves for example in the EU Parliament.

So part of the reason why we’re in this fix is I think because of a kind of willed complexity which has been deliberately imposed upon us. Another part of course is deliberate deception, which you will recognise and which Booker and North are very good in describing in their book, The Great Deception. I mean one example of the way in which all of this is done is the change of the name and the character of the EU, you know that we move from the EEC to the EC to the EU and they’re all rather different and every time there’s a change the conditions of it are different. The objectives seem to have been the same that is they were laid out in the Treaty of Rome in 1957, and they included of course free trade and a certain hostility to protection. But you will remember that the goal of free and undistorted competition was stripped by Nicolas Sarkozy particularly from the EU’s objectives at the last, as it were, summit meeting.

Sarkozy claimed that this was a defeat for Anglo-American ideology, which Tim has been talking about, and it made Europe more human. What it interestingly did was to change the goals and objectives of the European Community. Does that matter? Well yes it does in fact matter because the European Court of Justice is concerned not with our Anglo-Saxon strict construction of what the laws contain, but with the coherence of some proposal with the aims and objectives of the European Community, it is a different kind of court or as Margaret Thatcher once said, its not a court at all it’s a different kind of thing.

Now this also has another interesting implication. You see in 1975 it was said the 1975 Referendum decided that the British had opted in to the Treaty of Rome and everything that followed from it. That might at a pinch of being plausible if the objectives remained exactly the same. If the objectives change then that Referendum has no longer supplied the necessary legitimation of what we’re concerned with.

I simply do not wish to go on developing this for too long. I was concerned with the way in which the name changes and the way in which in operations such as the extension of the Euro adjust of the EU’s powers - confidences is an interesting word - the EU’s powers over law and order then what would this entail for Britain. You see the obvious point is British exceptionalism, which Tim has referred to. The British are very different from continental countries in legal tradition and of course in political experience. These two things are indeed very different. Now if you have differences of that sort, you might want for example to follow the principle that if you have say Austrian prisoners convicted in Britain and serving their sentence, you might want to free up the prison cell, which the present Government is very keen on doing, by sending this Austrian back to Austria so long as the Austrian has committed something that is illegal in Austria.

I choose Austria of course because the interesting example is David Irving. David Irving was convicted in Austria for the crime of denying the holocaust. It happens that is not a crime here. The interesting question that might then arise is can David Irving be moved into a British cell for part of his sentence, but if so then he would be imprisoned in Britain for something that is not a crime in Britain. Well you could solve this and dear Miss Merkel suggested that that would be the solution; you could solve this if the British Government made holocaust denial crime here. Now that would of course mean harmonization of criminal law, I mean harmonization is a marvellous concept in the European Union, I mean forgive me if I slide off to one side, but if you want to understand what is the essence of British and to some extent even European life, it is not harmonization, it is conflict. Harmonization is what most other civilisations are concerned with, they want a way of life in which everybody fits into the right place, they’ve got the right way of life and the good thing is obeying it and the bad thing is not fitting in. We have a completely different situation; our law for example is not judges declaring what the law is it’s a fight between the prosecution and the defence. Our economy is not any centrally directed form of production it is competition between independent enterprises. We have a church, an established church; we also have an awful lot of other religions as well. Our politics again is not the harmony of a wise ruler with advisors; it is a fight between government and opposition. In other words wherever you look in the vitality of the modern world you find conflict under the rule of law held in tension. And the tendency, it’s a very interesting and profound tendency within our civilisation, is to hate conflict and war and exclusion and things of that sort, why don’t we harmonize, why don’t we all get together.

You might remember a skit way, way back - no most of you probably wouldn’t remember it – in which he said, ‘I believe in human brotherhood’ said the stand-up comedian, ‘lets all get together, black and white you know Jew and gentile, lets form one big inclusive gang and then lets go and beat up the Pollacks’. He was based on Chicago and I think that probably is the principle of harmonization.

Now let me, I don’t want to go on forever, but I have suggested loosely and without going into it, that the European Treaty and indeed the development of the EU is to be recognised as a power grab, it is people wanting power and wanting us to give up our autonomies and our sovereignties in favour of being managed by these people. It is also I think something else. It is a part of the dynamic of bureaucracies, it’s a point I won’t have a chance to develop, but in the modern world governments tend to set up agencies to deal with complicated subjects like equality of race and sex, running educational examinations, there are agencies all over the place. We call them quangos in Britain and they are autonomous bureaucracies operating within legal boundaries. They all have a remit. Nearly all of them are asked to do more than they ought to do, which is why the health service is falling apart and education doesn’t work very well and so on. Now if you have a bureaucracy charged to deal with a situation and to bring order to it and it fails, as of course all bureaucracies inevitably fail, as all government fails in one way or another, it develops a thing called anomalies, things that are outside the rule, the nomos of the remit of the bureaucracy.

Now what does a bureaucracy do under those circumstances? Well it perfectly rationally says we want more power to deal with these anomalies. Now my favourite name at the moment for this principle is the imperialism of incompetent bureaucracies that is every time a bureaucracy fails it requires more power to be grabbed. The epiphany which led me to this startling and brilliant illumination about the nature of our Government came when Charles Clarke, briefly Home Secretary, was up in the House of Commons in a very embarrassing situation because he’d just lost about 1,000 foreign criminals who should have been released from prison and instantly on planes to wherever the hell they came from. They had as the phrase goes, disappeared into the community. And there was a big fuss about this. That’s part of a complexity point incidentally, fuss follows fuss. Almost every day there is some scandal but if there are enough of them they all sort of merge into another and you forget about them. I mean the more things governments do, the more things governments fail at the less accountable they become. But anyway Charles Clarke in the House of Commons said I take full responsibility for this - he didn’t of course, I mean that would involve his resignation and he didn’t have the slightest intention of resigning – I take full responsibility for this and I want to be given the opportunity to sort it out. In other words failure became a reason for being given more power and of course he would want more powers.

The interesting word by the way that is used in the European Union for a power, a right or the authority to do something, it’s a marvellous word that I always think of in French, it’s a competence, a competence and yet what we do know is that this is a set of people who are matchlessly incompetent, who of course waste our money on agriculture, who taking over our fishing waters and the fish all migrate to the Norwegians or the Icelanders, the fish begin to disappear, they can’t even give out money, I mean our late Conservative leader was complaining only last week that money for the tsunami relief for the Solomon Islands channelled through the European Union still hadn’t got to eh Solomon Islands years later.

Now this is a degree of incompetence with which we are very familiar in our national life and I need not go through the examples of them because I must stop talking, but we also have it in the European Union as well. And therefore I think there is a broad general problem we have as to how we have got into this situation in which power grabs succeed and the imperialist bureaucrats make their incompetence a reason for extending their power.